The OECD has now published the comments submitted by stakeholders to the Secretariat proposals for taxation of the digitalising economy on the basis of the ‘unified approach’ under Pillar One. Under the proposed approach, new taxation rights for market jurisdictions are recognised as a matter of novelty. The new rules are intended to apply to companies that derive value from consumer-interaction with users in market jurisdictions. Under the new profit allocation rules, a share of the deemed residual profits of the ‘consumer-facing’ multinational companies will be reallocated to market jurisdictions, through formulary apportionment and use of proxies such as sales.
CFE issued an Opinion Statement responding to the consultation highlighting a number of key elements that should be embedded as part of this process, calling for more clarity and early consensus at political level as to the outcome of the process. CFE’s statement emphasises the significance of departing from well-established principles of international tax law towards a more complex international tax system which partly introduces formulary apportionment. A public consultation meeting will take place this week from 21-22 November in Paris. Piergiorgio Valente, President of CFE Tax Advisers Europe, and Aleksandar Ivanovski, Tax Policy Manager of the CFE Brussels Office, will attend the consultation on behalf of CFE Tax Advisers Europe. Registrations are now closed, and the numbers of attendees are limited. Those unable to attend can watch the consultation live on OECD WebTV and the meetings will also be able to viewed later via the OnDemand tab of the OECD platform.
Ref. CFE’s Tax Top 5 – 18 November 2019